Local tax preparer must change ways, pay $60,000, AG says

Local taxpayers could get money back from Instant Tax Service, a preparer the state accused of filing unauthorized returns for individuals and charging excessive fees.

Ragan Robinson

See the consent judgment detailing a settlement between Instant Tax Service and the state.

Local taxpayers could get money back from Instant Tax Service, a preparer the state accused of filing unauthorized returns for individuals and charging excessive fees.

Instant Tax Service, which has offices on Union Road and Franklin Boulevard in Gastonia as well as a main branch in Charlotte, agreed to pay $60,000 to settle a suit filed by N.C. Attorney General Roy Cooper.

The money will pay for attorney fees, education and refunds, although the state does not know how much money will go back to taxpayers, said a spokeswoman with the N.C. Department of Justice.

A total of 116 consumers filed grievances about Instant Tax Service.

Customers can still file complaints with the state about Instant Tax Service either by calling 1-877-5NO-SCAM or going to NCDOJ.gov.

Once all complaints are evaluated, the justice department will decide on individual refunds from Instant Tax Service.

The company does not admit wrongdoing, although owner Eden Kidane apparently agreed to stop making cash-advance, holiday or pay stub-based loans.

Instant Tax Service can issue refund-anticipation loans, according to the settlement, but is barred from misrepresenting terms, amounts, eligibility or timing.

Numerous customers of the tax preparer said early this year they were duped by the company.

Many said they received holiday loans, giving their last pay stubs of the year as proof of income.

Gastonia police, called to the office after angry crowds gathered in January, said the loans were actually tax refund-anticipation loans. Some customers did not realize it at the time, police said.

So when people who’d gotten the loans tried to file tax returns elsewhere, they found the paperwork had already been filed on their behalf by Instant Tax Service.

The justice department says the preparer ran TV and radio ads in the region starting in December 2011, offering “instant” loans of up to $1,000.

Consumers reported to the state’s Attorney General that Instant Tax Service then filed returns without permission.

Cooper’s office also says Instant Tax Service often charged $700 to $800 for work that would have cost around $200 if a national tax preparer had done the paperwork.

The settlement requires Instant Tax Service to disclose its fees verbally and in writing and post pricing for services in a prominent place.

Other allegations held the Instant Tax Service locations would not answer phone calls and made customers stand outside offices for hours without answering questions.

Those were among the complaints from taxpayers in January when long lines formed outside the Franklin Boulevard office. Many were upset about delayed tax refunds but some also said they never meant to file with Instant Tax Service.

Others said they never signed the necessary paperwork for filing their taxes and questioned whether their signatures had been faked.

Police responded to calls from the office at least twice, saying at one point 75 people were crammed inside a space that could accommodate no more than 10.

Eden Kidane owns Instant Tax Service. She did not return calls Monday but said earlier this year there was no way tax preparers could file returns without customer signatures and verifications.

She also confirmed other Instant Tax Service offices in the region had to close in January after crowds swarmed the tax preparers.

Instant Tax Service’s two Gastonia locations have yet to open for the tax season, said a woman answering the phone for the company Monday. She said both offices will be open this year.

Have a complaint?

People with complaints about Instant Tax Service can air their grievances with the N.C. Department of Justice by:

Calling 1-877-NO-SCAM

Or go to NCDOJ.gov and choose “File a Complaint” under the Consumer tab

How to pick a tax preparer

Check the preparer’s credentials. Call 1-877-NO-SCAM or look to the Better Business Bureau to see if the office or person you’re considering has complaints on file.

Never give your personal information to someone you don’t know who calls or emails offering to help with taxes.

Beware of preparers who try to sell an extra guarantee, claiming they will reimburse you if they make a mistake and your filing has to be amended.

Be cautious of preparers who claim they can get larger refunds than other professionals.

Avoid those who base their fee on a percentage of the refund.

Make sure your preparer provides a copy of your tax return.

Consider whether the preparer or firm will be around the answer questions months or years after your return is filed.

Recognize that “rapid refund” kinds of offers are actually loans. Make sure you understand interest rate and what you will get back with and without the loan.

Recognize that accepting a loan offered by a tax preparer most likely means you’re agreeing to have that preparer file your taxes.

The IRS offers free online tax preparation software for taxpayers making less than $57,000. Go to IRS.gov/efile for details.